IRELAND - Greencore, the Irish convenience food manufacturer, has reported the deficit in its defined benefit (DB) pension schemes more than doubled to €68m in 2008.

In the final report of its annual results for the year to 26 September 2008, Greencore revealed net pension finance income, which reflects income associated with expected returns on DB pension assets and interest charged on discounting liabilities, fell from €10.2m in 2007 to €9.1m.

It warned while this is “materially variable year-on-year”, it confirmed it would be “significantly reduced in FY09 due to poor global pension asset returns”, and as a result admitted “due to the ongoing volatility associated with this accounting item, the group will exclude it from its adjusted EPS (earnings per share) from FY09 onwards”.

The group, which operates a number of DB schemes in Ireland, the UK and the Netherlands, also said in its report the fair value of the total plan fell from €547.3m to €386.6m, a drop of €150.8m in 12 months.

The firm’s results, published in January, confirmed the fall in asset values had resulted in an increased deficit in the Group’s DB schemes, as it increased from €25.8m in September 2007 to €68.1m a year later.

Greencore stressed the DB schemes are “exposed to the risk of changes in interest rates and the market values of investments, as well as inflation and the increasing longevity of scheme members”.

To try and mitigate these risks, the company said it paid “appropriate contributions” into the funds, with figures showing expected contributions by the group of €11.4m in 2009, slightly lower than the €12.9m paid in 2007.

The firm also said it had adopted “balanced investment strategies which are designed to avoid a material worsening of the current surplus or deficit in each fund”, with the investments in the fund split between equities, bonds, cash and property.

Greencore has also “closed off a number of its significant DB pension schemes to new members” to try and limit the risks posed by the pension schemes, and instead operates a number of defined contribution schemes, into which it paid €1.02m in 2008, an increase from the €960m paid the previous year.

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